Sega has since become a dedicated third-party developer, whose games now grace all the major consoles. With Sega out of the console business and Nintendo struggling to compete, the video game industry today is ruled by the corporate behemoths Sony and Microsoft. Admittedly, it wasn't very hard for them to gain control; both had much more capital to spend and were far removed from Nintendo's self-destructive traditionalism and Sega's past failures.
Microsoft's success in particular is surprising-it is an American company in what has been a wholly Japanese field since the mid-80s. Before the Nintendo Entertainment System (NES) was released in America, Atari, a domestic company, had single-handedly created and destroyed the console market. After the big gaming industry crash of 1983, it was Nintendo that revitalized the business with the release of the NES in 1985. Ever since then, Japanese companies have dominated the console world. This was the norm until Microsoft decided to step into the game.
With revolutionary online capabilities, the best hardware of its generation and a surprisingly diverse list of third-party support, the original Xbox proved that Microsoft was serious about becoming an industry competitor. While it was an above-average first attempt, it certainly wasn't perfect. The bulky design of the console and its original controller was, to put it bluntly, stereotypically American. And despite its apparent success in North America, the Xbox still ended up being the largest source of revenue loss for Microsoft, a number that currently stands at around $4 billion.
Still, the Xbox accomplished Microsoft's initial goal: It made the company an established name in the home entertainment arena. In the end, this allows Microsoft to be more daring with the 360, something that can be gleaned from a mere glance at the new console.
The 360's new design is highly stylized, with rounded edges and customizable faceplates, a significant departure from the ugly black box of the original. The new controller, perhaps the greatest console controller ever witnessed, is a cross between Sony's PS2 controller and their redesigned Xbox controller. Online play is also a much bigger deal this time around; every 360 console comes with a free subscription to Xbox Live, which will allow gamers to retrieve updates and purchase independent games over a broadband connection. The Xbox Live paid subscription offers even more options including online play on a much grander scale than the original Xbox.
The 360 is also heralding a new age of high-definition gaming; Microsoft has mandated that every game must support High Definition (HD) resolutions. Microsoft won't be forgetting about past Xbox games either as around 200 will be compatible with the 360 on launch, and this number will increase over time.
It looks as if Microsoft has learned from its mistakes and is aiming for the top spot in the console realm. We know that Nintendo has basically decided not to play the traditional console role this time around, so it won't be much of a competitor. It stands to reason, then, that Microsoft is looking to Sony's forthcoming PS3 as its primary competitor. The 360 already has several major advantages, including a yearlong lead over the PS3 and most likely a cheaper retail price. The high-end 360 model, which includes a wireless controller and hard drive, is the one most gamers will want, and it will cost them $400. By the time the PS3 comes out next year, this price may drop to $300-350, making the battle even tougher for Sony's console which is rumored to cost upwards of $600.
The 360 will certainly continue Microsoft's infiltration into the living room, but will it be enough to overpower Sony's dominance? We'll find out in a year.